Increasing Trust & Transparency: Supply Chain Software Providers Are Staying Ahead on EU Regulations by Expanding DPP Product Offerings and Integrating AI Capabilities

By Rithika Thomas | 4Q 2024 | IN-7562

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Small and medium Supply Chain Software (SCS) providers are strengthening their product offerings through strategic partnerships, integrating Artificial Intelligence (AI) to streamline data collection, product offerings, and collaborations to enhance supply chain transparency, compliance, tracking, quality control, and management.

• Migros and Kezzler launched a centralized platform to streamline business processes to enhance supply chain transparency and cross-industry collaboration.
• Blue Yonder's AI-powered supply chain platform and FPT Software's regional expertise has created a customized supply chain management solution catering to specific industry challenges with efficient strategies.
• 3E is further strengthening its SCS capabilities through the acquisition of ChemChain to support data management, scalability, and compliance.
• Inspectorio's new AI-powered supply chain management platform is an integrated end-to-end supply chain operation tool to visualize, map, and identify risks and opportunities for optimization.
• ERM is partnering with OPTEL to enhance supply chain visibility, performance improvement, and regulatory compliance like the European Union Deforestation Regulation (EUDR), the Corporate Sustainability Reporting Directive (CSRD), the Carbon Border Adjustment Mechanism (CBAM), and Digital Product Passports (DPPs).

Through these initiatives, companies accelerate innovation, meet customer demands and compliance, and improve operational excellence through demand-driven forecasting, thus strengthening decision-making.

SCS focuses on the management of inventory, procurement, and real-time insights on tracking goods and their journey to the customer. DPPs offer cradle-to-grave information on a granular level accessible by multiple stakeholders in the value chain. Additionally, it empowers customers to make more informed choices about their products and ensures compliance through a comprehensive digital platform or QR code, thus promoting sustainable production and unlocking circular business opportunities on a singular digital platform.

Small and Medium Enterprises (SMEs) are adopting AI for data collection, and missing data alerts, which will streamline the DPP creation process and stay ahead in a competitive landscape. Granular supply chain data transparency improves operational efficiencies by collecting data across the value chain, supporting manufacturers in identifying potential challenges or risks and subsequently reducing costs. Other applications of AI include demand forecasting, inventory management, identifying operational hotspots, and customer service.

SCS catering to the European Union (EU) market are expanding offerings to cater to the DPP market to unlock new revenue streams, create/support circular businesses, ensure compliance, and identify the opportunities within an untapped customer base that values sustainability and transparency. Utilizing existing data stored in SCS tools and adding an additional digital layer of specificity will seamlessly support the transition to create DPPs. This will create a competitive advantage, demonstrate sustainability compliance, and reinforcing brand reputation.

ABI Research values the DPP market at US$157 million with the key players being Avery Dennison, leading with 17% of the market share, followed by Siemens and 3E. These companies have established supply chain expertise and expanded offerings to DPPs due to customer demand and pressing EU regulations. SMEs such as Kezzler, Inspectorio, Oritain, PSQR, KURZ DIGITAL, SyncForce, and Protokol represent under 5% of the market today, but offer strong innovative solutions with AI capabilities creating a multi-fold impact over the coming years.

For SCS providers to succeed in the DPP market, the solutions need to possess the following functionalities:

• Robust Data Framework within a User-Friendly Platform
• Interoperability of Data: Assess data availability and provide solutions to bridge the gaps with existing Information Technology (IT) infrastructure and sustainability software tools.
• Be Agile to Adapt and Align with Regulations: As regulations evolve and data formats become industry standards, solution providers must quickly maintain data consistency.
• Multi-User Access and Data Governance: Critical to the success of DPPs is multi-user access, interoperability with third-party platforms, and visibility of propriety information across the product lifecycle. As solution providers and manufacturers navigate this challenge, policymakers are pressing for centralized open-source data repositories to consolidate all the traceability data, which will be required for reporting to the EU.
• Data Ownership: As business models develop around creating DPPs, solution providers must explicitly describe the ownership rights and terms for all ecosystem stakeholders involved to access information across the product lifecycle. This can range from a couple of days for consumables to years in the case of the construction industry.

Creating and implementing DPPs is reinforcing the need for transparency, digitalization, compliance, and circular business models to support our future sustainable economy. More information can be found in ABI Research's Digital Product Passports: Tech-Driven Sustainability and Traceability for EV Batteries, Construction Materials, and Pilot Use Cases report (AN-5868), Digital Product Passports market data (MD-DPVCM-23), Digital Product Passports Market Data Overview: 2Q 2024 presentation (PT-3089), and Digital Product Passports competitive ranking report (CA-1489).